This document discusses the nature and goals of financial management. It outlines key finance functions like investment decisions, financing decisions, and dividend allocation. The primary goals of financial management are profit maximization, maximizing earnings per share, and shareholder wealth maximization. However, profit maximization alone is an unrealistic goal as it ignores risk and timing. Shareholder wealth maximization is a better goal as it accounts for risk and the timing of cash flows. Financial decisions involve balancing risk and return, with higher returns requiring more risk. Managers may have different goals than shareholders, so shareholder wealth maximization is important to ensure managers' decisions maximize owner value.

1. Nature of Financial Management